1. Forms
2. CG
3. CG-21-34

Exclusion - Designated Work (CG 21 34)

What the form is:

The CG 21 34, formally titled "Exclusion - Designated Work," is an endorsement to a Commercial General Liability (CGL) policy. Its primary function is to exclude coverage for "bodily injury" or "property damage" that is included in the "products-completed operations hazard" and arises out of specific work performed by or on behalf of the named insured, as described in the endorsement's schedule. Essentially, this means that if a claim arises from work that has been completed and is specifically listed in this endorsement, the CGL policy will not provide coverage for that claim. It's important to note that this exclusion typically applies to the completed operations aspect of the work and does not affect coverage for ongoing operations unless otherwise specified.

Classes of business it applies to:

This endorsement is most prevalently used in the construction industry. However, it can be applied to any business where the insurer wishes to exclude liability for specific completed projects or types of work. Examples include:

• A general contractor who has previously performed a type of work that resulted in significant claims (e.g., a specific type of roofing or foundation work) and the insurer now wants to exclude that specific type of past or future completed work.
• A contractor that performs a high-risk operation that the insurer is unwilling to cover under the standard CGL, such as work at extreme heights or involving hazardous materials. For instance, a policy might exclude coverage for any work done at heights above three stories.
• Businesses that have performed work on a project that is now known to have defects, and the insurer wants to prevent future claims arising from that specific problematic project.
• Situations where a contractor has performed incidental ineligible operations in the past but no longer performs or intends to perform such work; this endorsement can exclude losses arising from that past work.

Special considerations:

• Specificity is Key: The description of the "designated work" in the schedule is critical. Ambiguous wording can lead to coverage disputes. The schedule might specify types of work, dates, locations, or even all work completed before a certain date.
• Completed Operations Only: Generally, this endorsement applies to the "products-completed operations hazard." This means it typically excludes work after it's finished. Coverage for ongoing operations might still apply unless another endorsement (like CG 21 53 Exclusion - Designated Ongoing Operations) is used.
• Prior Work Exclusion: The CG 21 34 can be used as a "prior work" exclusion, where the schedule specifies that the exclusion applies to all work completed before a particular date.
• Insured's Awareness: Insureds must clearly understand what work is being excluded to avoid undertaking jobs for which they will not have completed operations coverage.
• Regulatory Context: While applicable in all states, specific state regulations or legal precedents might influence its interpretation or application. Some contractual agreements, particularly in public works or with large entities, may prohibit or require the deletion of such endorsements.

Key information for agents and underwriters:

• Risk Assessment: This endorsement is a tool for underwriters to manage exposures deemed too high-risk for standard coverage or outside the carrier's underwriting appetite. It allows an insurer to write a policy for an insured that might otherwise be unacceptable by carving out specific high-hazard completed operations.
• Pricing: Excluding specific work can impact the premium, potentially lowering it by removing high-risk exposures. However, the overall impact depends on the nature and extent of the excluded work relative to the insured's total operations.
• Coverage Gaps: Agents must ensure their clients understand the significant coverage gap created by this exclusion. If the excluded work is a core part of the insured's operations, alternative coverage solutions (e.g., project-specific policies, specialized coverage) might be necessary. Failure to address this can lead to E&O exposures for the agent.
• Underwriting Guidelines: Underwriters will carefully scrutinize the insured's loss history and the nature of the work to be excluded. They may require detailed information about past projects or specific operational procedures before agreeing to use this endorsement. Some insurers may have specific programs or guidelines that dictate when and how this endorsement can be used, for example, for contractors who have performed ineligible operations in the past but no longer do so.
• Relation to Other Forms: The CG 21 34 is often used in conjunction with the standard CGL form (CG 00 01). It's crucial to understand how it interacts with other endorsements that might be on the policy. For example, it differs from CG 21 04 (Exclusion - Products-Completed Operations Hazard), which excludes all products-completed operations liability, whereas CG 21 34 targets only specifically designated work. It's also distinct from endorsements that limit coverage to designated premises or projects (e.g., CG 21 44).